Gem Diamonds Limited · LSE:GEMD
Gem Diamonds — FY2018 Earnings Presentation
28 slides from Gem Diamonds's earnings presentation, Mar 13, 2019
Slide 1: 2018 Full Year results
2018 Full Year results 13 March 2019
Slide 2: Disclaimer
Disclaimer The following presentation is confidential and is being made only to, and is only directed at, persons to whom such presentation may lawfully be communicated (“relevant persons”). Any person who is not a relevant person should not act or rely on this presentation or any of its contents. I
Slide 3: 2018 delivery
2018 delivery Revenue EBITDA EPS 25% 83% 370% $267m $82m 18.8 US cents $/carat achieved Carats recovered AIFR 10% 13% Historical low $2 131 126 875 1.45 Cashflow per share Share price growth 30% 54% $1.00 Market cap $196m 3
Slide 4: Key strategic priorities
Key strategic priorities Extracting maximum value Working responsibly and Preparing for our from operations maintaining social licence future Driving business optimisation Promoting a culture of zero harm Advancing innovative and responsible care technologies focusing on reducing diamond damage Buil
Slide 5: 2018 performance
2018 performance Extracting maximum value Working responsibly and Preparing for our from operations maintaining social licence future Business Transformation target No major or significant Commenced construction of of $100m by 2021 on track – community or environmental pilot plant for early detectio
Slide 6: The 2018 diamond market
The 2018 diamond market Global economic backdrop Diamond market Gem Diamonds’ market position Fast paced growth of the US Marginal improvement in rough Highest $ per carat kimberlite economy and polished diamond prices producer Smaller commercial type goods US-China trade tensions remain under signi
Slide 7: Global supply forecast
Global supply forecast Source: Paul Zimnisky 7
Slide 8: Zero harm is a priority
Zero harm is a priority • Four LTIs - all occurred in Q1 2018 • AIFR historical low • In 2018 there were no: • fatalities • incidents of compromised dam integrity • major or significant environmental incidents All injury frequency rate (AIFR) Lost time injury frequency rate (LTIFR) 3.01 2.87 0.20 0.
Slide 9: Corporate social investment
Corporate social investment • No major or significant community incidents • Ongoing CSI investments made over time, including: • Small and Medium Enterprise Development • Wool and Mohair Project • Butha Buthe Vegetable Project • Dairy Project • Education • Tertiary education scholarships • Work inte
Slide 10: Dam safety management
Dam safety management • Management systems comply with internationally accepted practice • Downstream construction method utilised • Rigorous monitoring programme in place • Emergency warning system and evacuation procedures in place and regularly tested • Completed dam safety workshop and site insp
Slide 11: Letšeng operational overview
Letšeng operational overview Waste tonnes mined (millions) • Improvement in plant stability and runtime 29.8 29.7 • Plant shutdowns in H1 for replacement of scrubber shell 24.0 25.8 19.9 • H1 2018 treated 3.0m tonnes • H2 2018 treated 3.5m tonnes • Grade performance in line with expectations 2014 20
Slide 12: Letšeng mine plan
Letšeng mine plan 2006 2018 Waste tonnes mined: nil Waste tonnes mined: 25.8mtpa Ore tonnes treated: 3.1mtpa Ore tonnes treated: 6.5mtpa Carats recovered: 54 677 Carats recovered: 126 875 Aerial view of Letšeng mine - 2004 Aerial view of Letšeng mine - 2018 12
Slide 13: Letšeng mine plan - pit design
Letšeng mine plan - pit design 13
Slide 14: Letšeng mine plan - profile
Letšeng mine plan - profile Waste profile Profile 2017 MP* 2019 MP Change 2019 MP 2017 MP* 40 Total waste 344m 249m -95m 35 30 25 Millions 20 15 10 5 0 Ore and carat profile Satellite pipe material Main pipe material Carats recovered Profile 2017 MP* 2019 MP Change 7 140 6 120 Total carats 1.93m 1.9
Slide 15: Letšeng 2019 Guidance
Letšeng 2019 Guidance 2019 Guidance Waste stripped (Mt) 25 – 27 Ore treated (Mt) 6.5 - 6.7 Satellite pipe ore contribution (Mt)1 1.8 Carats recovered (Kct) 114 – 118 Carats sold (Kct) 115 – 119 Direct cash costs (before waste) per tonne treated2,3 (Maloti) 175 – 185 Operating costs per tonne treated
Slide 16: Sales & Marketing
Sales & Marketing • 910 carat Lesotho Legend sold for $40 million within 2 months of recovery • Secure sales on electronic tender platform in Antwerp • Increased customer base through additional Tel Aviv viewings • Achieved average $ per carat of $2 131 Revenue by size fraction Annual $ per carat 9%
Slide 17: Significant recoveries in 2018
Significant recoveries in 2018 4.06ct pink 2.26ct pink ($64 067/ct) ($62 433/ct) 151.78 ct ($48 306/ct) 138.20ct (US$60 428/ct) 49.84 ct ($52 896/ct) 910 ct Lesotho Legend ($43 912/ct) 169.10 ct ($55 354/ct) 17
Slide 18: Technology and Innovation
Technology and Innovation • Construction of integrated pilot plant at Letšeng for $3m • On track for completion by Q2 2019 • Testing of pilot diamond detection unit • Continued testing of non-mechanical liberation unit Surge Bin Stockpile Feed Mini- substation Diamond detection unit Sizing screen Mo
Slide 19: Delivering on our $100 million target
Delivering on our $100 million target $30m per $100m annum 4 20 7 $70m $43m 5 5 $100m 42 At 31 2 2 4 28 $21m 5 cumulative December 5 2 9 9 4-year Implemented 2 3 target $64m 1 1 8 34 25 12 $1m 13 12 14 14 10 1 5 0 2017 2018 2019 2020 2021 2022 Mining Processing onwards Cumulative $100m Sustainable $
Slide 20: Financial results
Financial results Revenue Cost of sales Corporate costs 267 214 152 141 $ millions $ millions $ millions 10.0 9.2 2017 2018 2017 2018 2017 2018 EBITDA Profit after tax Basic EPS 82 $ millions 47 $ millions $ cents 45 18.8 17 4.0 2017 2018 2017 2018 2017 2018 Return on average Capital investment Cash
Slide 21: Letšeng cost analysis
Letšeng cost analysis 2018 2017 % Variance Ore tonnes treated (millions) 6.5 6.4 1% 1 Direct cash costs 141.54 134.20 5% Operating Costs 3rd Plant operator costs 24.18 15.34 58% Once-off plant maintenance costs 2.82 - 100% Sub - total 168.54 149.54 13% Mobile XRT machine operating 1.61 - 100% costs
Slide 22: Improving cash position
Improving cash position Cash • Group cash of $50.8m ($43.3m attributable) • Net cash of $17.5m after debt of $33.3m • Refinanced facility at Letšeng – increased by c$18m 168 79 Cash Available facilities US$ millions 21 20 109 84 13 11 10 58 36 6 5 48 56 51 Cash and Letšeng - Letšeng - Dividends to G
Slide 23: Contact us
Gem Diamonds Limited Celicourt Communications IR@gemdiamonds.com Joanna Parker/Mark Antelme Contact us T: +44 (0) 207 520 9565
Slide 24: Appendix A - Corporate Social Investment
Appendix A - Corporate Social Investment Wool and mohair project Butha-Buthe vegetable project Butha-Buthe vegetable project School classrooms Dairy project Health post 24
Slide 25: Appendix B - Funding
Appendix B - Funding • Letšeng LSL250m 3-year RCF renewed as follows: • Increased to LSL500m ($34.8m); and • Lesotho prime rate less 1.5%. • Further 3 year tenure to July 2021 • Total capital repayment of debt of $10.0m during 2018 Original facility Balance Term / Available Company Lender Expiry Amo
Slide 26: Appendix C – Statement of profit or loss
Appendix C – Statement of profit or loss % $ millions 2018 2017 Variance Revenue 267.3 214.3 25% Royalty and selling costs (22.9) (18.8) Cost of sales1 (152.1) (141.3) Corporate expenses (10.0) (9.2) Underlying EBITDA 82.3 45.0 83% Depreciation and mining asset amortisation (8.6) (8.9) Non cash & ot
Slide 27: Appendix D - Financial position
Appendix D - Financial position $ millions 2018 2017 % Variance Non-current assets 303.3 321.0 Current assets 89.3 89.5 Assets held for sale 0.8 2.1 Total assets 393.4 412.6 -5% Equity attributable to the parent company 156.2 158.3 Non-controlling interest 72.1 85.8 Total equity 228.3 244.1 -6% Non-
Slide 28: Appendix E - Market information
Appendix E - Market information 2018 annual share performance Gem Diamonds Limited is listed on the Main Board Volume (000s) Price (GBp) of the London Stock Exchange LSE : GEMD 3000 1.40 Daily average trading volume across all 1.20 2500 platforms (last 30 days) 86k 1.00 Thousands 2000 Shares in issu